Federal appeals court overturns $1.6 bn ruling against IBM in BMC case

BMC case: IBM has successfully overturned a $1.6 billion judgment in favor of BMC Software, following a federal appeals court decision. The initial judgment stemmed from allegations that IBM improperly replaced BMC's mainframe software at AT&T with its own.

The 5th US Circuit Court of Appeals in New Orleans ruled that a lower court judge's finding of liability was erroneous. US Circuit Judge Edith Jones, writing for a three-judge panel, stated that AT&T's decision to switch to IBM software was independent, and BMC had lost to IBM through fair competition.

A BMC spokesperson declined to comment, while an IBM spokesperson expressed gratitude for the court's decision, stating that the company had acted in good faith throughout the engagement.

AT&T, though not involved in the case, has not yet provided comment.

BMC, headquartered in Houston, specialises in proprietary mainframe software products. According to the ruling, IBM had an agreement allowing it to maintain and operate mainframes running BMC software, with a provision preventing IBM from switching clients' software to its own.

The lawsuit, filed in Houston federal court, alleged that IBM breached this agreement when AT&T transitioned to IBM's software for mainframe operations.

The recent ruling overturns a 2022 decision by U.S. District Judge Gray Miller, who had ordered IBM to pay $1.6 billion in damages to BMC, citing IBM's alleged secret agreement to replace BMC's software at AT&T during contract negotiations in 2015.

(With Reuters inputs)